Accounting for Firms in Ethnic Wage Gaps Across the Earnings Distribution

Alex Bryson (), John Forth (), Lucy Stokes (), Phan Van (), Carl Singleton, Felix Ritchie () and Damian Whittard ()

No 570, National Institute of Economic and Social Research (NIESR) Discussion Papers from National Institute of Economic and Social Research

Abstract: Most studies of ethnic wage gaps rely on household survey data. As such, they are unable to examine the degree to which wage gaps arise within or between firms. We contribute to the literature using high quality employer-employee payroll data on jobs, hours, and earnings, linked with the personal and family characteristics of workers from the population census for England and Wales. We reveal substantial unexplained wage gaps disadvantaging ethnic minority groups among both women and men. These disparities occur predominantly within firms rather than between them and are especially pronounced among higher earners. The patterns vary significantly by gender and by ethnic minority group compared to white workers. Since most of the wage disadvantage for ethnic minorities is within-firm, our results suggest that the UK's recent legislative reforms on firm-level gender pay gap reporting should be expanded to encompass ethnicity pay gaps.

Keywords: Employer-Employee Data; Unconditional Quantile Regression; Decomposition Methods; UK Labour Market (search for similar items in EconPapers)
JEL-codes: I10 J24 J62 (search for similar items in EconPapers)
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